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Collaborative business modelling for systemic and sustainability innovations

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  • Rohrbeck Heger GmbH

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Sustainability innovations are characterized by a systemic nature and require that multiple organizations act in an orchestrated fashion. To jointly identify opportunities and plan sustainability innovations, new methods and approaches are needed. In this article we describe a case study where 8 firms have collaborated to envision and create new business models in the energy industry. After describing this collaborative business modelling (CBM) approach, we discuss its strengths and limitations and compare it to two alternative methods of strategy and innovation planning: scenario technique and roadmapping. We find that CBM creates a powerful platform for (1) jointly identifying economic and societal value, (2) defining value creation/value capture systems, and (3) planning of complex and uncertain future markets.
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Electronic copy available at: http://ssrn.com/abstract=2197724
Int. J. of Technology Management, Vol. x, No. x, xxxx 1
Collaborative business modelling for systemic and
sustainability innovations
René Rohrbeck*
Aarhus University, Business and Social Sciences, Department of
Business Administration, Bartholins Allé 10, 8000 Aarhus, Denmark.
E-mail: rrohr@asb.dk
Lars Konnertz
Technische Universität Berlin, Straße des 17. Juni 135, 10623 Berlin,
Germany.
E-mail: larskonnertz@gmx.de
Sebastian Knab
Universität Hamburg, Chair of Business Ethics and Management, Von-
Melle-Park 9, 20146 Hamburg, Germany.
E-mail: sebastian.knab@wiso.uni-hamburg.de
Abstract: Sustainability innovations are characterized by a systemic nature and
require that multiple organizations act in an orchestrated fashion. To jointly
identify opportunities and plan sustainability innovations, new methods and
approaches are needed. In this article we describe a case study where 8 firms
have collaborated to envision and create new business models in the energy
industry. After describing this collaborative business modelling (CBM)
approach, we discuss its strengths and limitations and compare it to two
alternative methods of strategy and innovation planning: scenario technique
and roadmapping. We find that CBM creates a powerful platform for (1) jointly
identifying economic and societal value, (2) defining value creation/value
capture systems, and (3) planning of complex and uncertain future markets.
Keywords: New market creation, collaborative innovation, business model,
sustainability innovations, systemic innovations, collaborative business
modelling.
This paper is a revised and expanded version of a paper entitled “How Collaborative Business Modelling Can
Be Used to Jointly Explore Sustainability Innovations” presented at ISPIM Annual Conference, 2011,
Hamburg, Germany
Electronic copy available at: http://ssrn.com/abstract=2197724
Collaborative business modelling for systemic and sustainability innovations 2
Introduction
The need to move towards a more sustainable future is perceived by many as both
critical and imminent (Ulhoi & Madsen, 2009; United Nations Secretary-General's high-
level panel on global sustainability, 2012). Increasingly the need to become more
sustainable is also entering corporate board-room agendas and an increasing number of
firms are reporting that investing in sustainability measures pays off (MIT Sloan
Management Review & The Boston Consulting Group, 2012). However sustainability
innovations often consist of incremental enhancements within one organization, rather
than more radical innovations that create new markets and solve grand societal challenges
(de Boer & van Bergen, 2012).
The failure of economic agents (governments, non-governmental organizations, and
firms) to produce such radical innovations has been attributed to different factors. One
reason is that there is no expectation of a positive impact on their competitive advantage,
and therefore firms do not respond to the increasing stakeholder pressure (Garces-
Ayerbe, Rivera-Torres, & Murillo-Luna, 2012). This issue might improve over time as
more and more firms report on value creation through the implementation of
sustainability measures and eventually also through a change of mindset as Porter and
Kramer argue in their conceptual article (Kanter, 2011; Porter & Kramer, 2011).
Another reason is the complexity and uncertainty of creating a new economic system,
which is needed in many radical sustainability innovations. In that respect Johnson and
Suskewicz (2009) note that:
Conventional approaches to renewable energy are falling short. The
key is to shift focus from developing individual technologies to
creating whole new systems.
A third reason is the lack of confidence in the individual economic agents as to their
ability to get access to the specialized assets from other actors, that they need to
commercialize the innovation (Pinkse & Kolk, 2010). Thus, the more prudent strategy is
not to invest in the sustainable innovation opportunity.
In this article we present and discuss an approach where multiple firms have worked
together to identify, describe and evaluate business models in the field of smart energy,
i.e. in integrated and partly automated management of the supply side, the demand side
and the transportation of energy (Knab, Strunz, & Lehmann, 2010).
The challenge to create sustainability innovations
Sustainability innovation
We define sustainability innovations as
…inventions in technology, process or market that simultaneously
create economic and societal value. Societal value can be
differentiated in protecting the environment, ensuring economic
growth and advancing social well-being.
3
The complexity of sustainability innovations might in some cases be low, when for
example a new invention allows a firm to provide a child-care scheme to its employees.
Here, only two economic agents would be involved: (1) the firm and (2) the part of the
employees, who are parents. The innovation might raise the productivity of the parents,
create economic value for the firm and enhance the education and well-being of the
children, thus creating societal value. Such a service might be engineered and funded by
the firm and supplied for free. In such a case, the overall uncertainty attached to the
innovation is limited to the technical feasibility and thus perhaps so low that the firm can
take the risk alone.
Other sustainability innovations in the past, such as the introduction of electrical
lighting, have a considerably higher inherent complexity. Edison did not only need to
invent the technical design of the light bulb, he also needed to (1) invent the electricity
distributions system, (2) envision how to finance the installation of the infrastructure, (3)
overcome regulatory obstacles and survive the opposition of the kerosene-based lighting
industry (Johnson & Suskewicz, 2009).
The majority of sustainability innovations still takes the form of incremental
innovation (Hellström, 2007). However major sustainability goals, such as the European
Union’s objective to reduce greenhouse gas emissions by 80-95% until 2050 compared to
1990 is not achievable by incremental innovation (European Commission, 2011).
Systemic Innovation
This systemic nature of sustainability innovations (Dubosson-Torbay, Osterwalder, &
Pigneur, 2002; Paucar-Caceres & Espinosa, 2011) with many interdependencies between
the elements and complex architecture (Johnson & Suskewicz, 2009; Ulhøi, 2008) often
requires that multiple organizations work together and pool complementary assets (De
Laat, 1999; Miles, Miles, & Snow, 2006). Many expect that in the future more of these
networked innovation activities will take place (Berg, Pihlajamaa, Poskela, & Smedlund,
2006). To succeed, such networks need to create a shared vision with powerful
expectations that will allow mobilizing sufficient resources (McDowall & Eames, 2006;
Rohrbeck & Kallehave, 2012).
To envision future value chains, plan joint R&D efforts, forecast demand and
willingness to pay, a common platform for discussion among the actors is needed
(Probert, Farrukh, Gregory, & Robinson, 1999). Such a framework needs to be
comprehensive enough to touch all major issues, but if it becomes too detailed or
complex, it would prevent effective strategic discussions and consequently inhibit the
development of a common understanding and joint goals (Lichtenthaler, 2005). In
addition, it should also help to avoid the risk of over-emphasizing the technology
perspective of the innovation (Hanninen, 2007).
Managing sustainability innovations of a systemic nature
If sustainability innovations require that multiple actors work together, they will have to
adapt to some open-innovation principles to a certain extent (Chesbrough, 2003). In
open-innovation collaborations, organizations pool knowledge, technologies and other
assets and work together across industries and along the value chain (Chiou, 2011;
Lichtenthaler, 2011). Scholars report about a growing number of firms that open up and
Collaborative business modelling for systemic and sustainability innovations 4
introduce processes and mechanisms that allow them to work together with public and
private partners to create innovations jointly (Dodgson, Gann, & Salter, 2006; Rohrbeck,
Hölzle, & Gemünden, 2009). It can be regarded as a promising sign that one of the
requirements for creating sustainability innovations is thus being met.
Another requirement is that a suitable discussion and a framework for planning can
be found. When looking into innovation management methods, we identified three
candidates that can be expected to be particularly suitable to (1) deal with uncertainty, (2)
provide a holistic picture of future states, (3) provide a platform for collaborative
discussion and (4) serve as a framework for planning:
The scenario technique is known to successfully enable strategic discussions and
visioning (Chermack, van der Merwe, & Lynham, 2007; Visser & Chermack, 2009),
but less suited for detailed planning (Ringland, 2010).
Roadmapping has its strengths in planning (Phaal, Farrukh, & Probert, 2004c) and
decision-making (Petrick & Echols, 2004) as well as identifying interrelationships
between the market and the technology (Groenveld, 2007; Phaal, Farrukh, & Probert,
2004b; Thom, Rohrbeck, & Dunaj, 2010) and facilitating open innovation
(Lichtenthaler, 2008b).
Business modelling which allows discussions and visualizations of new value
creation/value capture systems on a conceptual level (Itami & Nishino, 2010; Teece,
2010) and works particularly well in uncertain, fast-moving and unpredictable
environments (McGrath, 2010).
Various authors have documented that roadmapping and the scenario technique can
successfully be applied by private companies, (Rice, Leifer, & O'Connor, 2002;
Ringland, 2010; Wells, Phaal, Farrukh, & Probert, 2004) in public R&D planning (Saritas
& Aylen, 2008) and in public-private research projects (Phaal, Farrukh, & Probert,
2004a). It has also been noted that the scenario technique is suited to create common
ground in a collaborative innovation setting (Cairns, Wright, Van der Heijden, Bradfield,
& Burt, 2006). Roadmapping has its strength in the coordination of different actors either
within the firm or with external partners (Phaal et al., 2004c). Used with external
partners, roadmaps allow the integration of open innovation processes, particularly to
support external knowledge exploitation (Lichtenthaler, 2008a).
Our proposition for the role of collaborative business modelling (CBM)
In this paper we want to report and discuss the role that collaborative business modelling
may play in discussing, inventing and planning sustainability innovations. For this paper
we define three key terms as follows:
A business model to be the logic and architecture of economic and societal value
creation and value capture system (Amit & Zott, 2012; Chesbrough & Rosenbloom,
2002; Siggelkow, 2002; Teece, 2010; Zott & Amit, 2010). It may allow a firm to
attain a competitive advantage and/or to create a new market (Storbacka & Nenonen,
2011; Thompson & MacMillan, 2010; Yunus, Moingeon, & Lehmann-Ortega,
2010).
Business modelling to be a creative and inventive activity that involves
experimenting (Chesbrough, 2010) with content, structure and governance of
5
transactions that are designed to create and capture value (Sosna, Trevinyo-
RodrÌguez, & Velamuri, 2010; Timmers, 1998; Zott & Amit, 2010).
Collaborative business modelling as an activity where multiple organizations that
might differ in type (industry, public research and non-profit), their position in the
value chain (manufacturing, service, etc.) and industry (energy, ICT, etc.) work
together to create a value creation system. In some cases, they will also attempt
jointly to create the value capture system.
We engaged in the study of collaborative business modelling with three expectations:
In order to create sustainability innovations that are complex and yield sufficient
value to create a new market, multiple actors need to act in an orchestrated fashion
(Johnson & Suskewicz, 2009). The need for coordination is particularly high in
innovation fields that cross industry boundaries and where a technological
convergence is occurring (Lei, 2000).
Developing new markets necessitates decisions and planning, while a high level of
uncertainty about key variables persists (Hacklin & Wallnöfer, 2012; Ruff, 2006). In
such circumstances, the ability to foresight and predict key developments with other
organizations will facilitate decision-making (Doz & Kosonen, 2010; McDowall &
Eames, 2006).
The business model framework and the graphical representation of the business
model canvas (Osterwalder & Pigneur, 2010) provide a particularly suitable platform
to experiment with alternative configurations of a business model (Chesbrough,
2010) and has a level of detail, which is effective for facilitating strategic discussions
and innovation planning.
These expectations also represent the hypotheses against which we will evaluate the
methodology in general and the case project in particular.
As a frame of reference, we used Osterwalder’s ontology of a business model
(Osterwalder, 2004). It consists of four “main areas”, which are broken down into a set of
nine building blocks (see figure 1). Since its introduction, it has been further developed to
a methodology designed for use in workshops or similar creative environments. It uses a
visualization concept in form of a canvas, which shows all relevant aspects of the
business model and facilitates joint editing and development (Osterwalder & Pigneur,
2010).
Collaborative business modelling for systemic and sustainability innovations 6
Figure 1: Building blocks of Osterwalder’s business model ontology and the “Business Model
Canvas”.
Case study in the German smart energy market
Case setting
The German energy sector is changing due to liberalization, a pressure from the public
for more sustainability, new legislation and emerging technologies (Bouffard & Kirschen,
2008). These changes will lead to a market that is more flexible, fast changing and highly
dependent on the collaboration of different companies along the value chain (Knab et al.,
2010). However, most energy utilities lack organizational structures and processes that
allow them to respond effectively to a rapidly changing environment (van Dinther,
Weidlich, & Block, 2006).
Even though smart metering and smart grid topics are currently heavily discussed in
the German energy market and important benefits from smart metering and smart grids
are expected, innovations are not pursued fast enough (Price Waterhouse Coopers
(PWC), 2008). As discussed above the systematic nature of smart-grid innovations is also
a key barrier for innovation activity. Smart metering innovations for example require the
meter producers, the energy grid providers, the energy producers and the local as well as
the national governments to act in an orchestrated fashion.
The setting of our case study was eight companies from both the energy and the ICT
sector. The participants included six energy utilities, a telecommunications provider, and
7
a telecommunications research institution. The energy utilities had a diverse background
in terms of size, product and service scope, and geographical reach. Some of the
participating companies were competitors, while others worked at different levels of the
value chain. The case study was set up as a working group with representatives of all
companies. Participants had a diverse background and came from R&D and innovation
management, product development and sales, network operations and smart energy pilot
projects.
Application of the collaborative business modelling approach
The case study was conducted from April to October 2010 and spanned over three
workshops supplemented by additional research between workshops. The participants
also shared internal knowledge and research results from their respective organizations.
The research conducted between workshops consisted mainly of interviews and desk
research. The research was used to revise and detail the output from previous workshops
and to prepare input for the upcoming workshop.
In the following, the implementation of the three steps of the CBM approach in this
case study is explained. Figure 2 highlights some of the methods used within the
respective step.
Figure 2: The Collaborative Business Modelling process
Idea generation
In the first phase, the focus of the exercise was on generating many options and building
blocks for smart-grid business models. As it was the first meeting of the participants of
the working group who came from very different backgrounds, it was very important to
create trust within the group by getting to know each other and share expectations
towards the collaboration.
Before the group started the idea generation, there was an introduction to the smart
energy market and the methodological approach. Both sessions were followed by time for
group discussions to start synchronizing the participants’ views on the market
opportunities and harmonising terminology. At the same time, these steps supported the
creation of an atmosphere of openness and trust among the participants.
After formation of groups, the actual idea generation process started with the
brainstorming of potential building blocks of smart-energy business models. Building
blocks were developed without looking at how they fitted together or how realistic they
were. The focus was on quantity, creativity and novelty.
In the next step, the brain-writing technique was used to start putting building blocks
together and develop smart-energy business models. For this, the participants were
Idea generation Prioritisation Validation
!Brainstorming of possible
building blocks for business
models
!Development of business
models from the building
blocks using brainwriting
technique
!Prioritisation of business
models according to expected
return and needed effort
!Creating a common
understanding of the market
!Validation of selected
business models
!Planning joint development
and commercialization
activities
Collaborative business modelling for systemic and sustainability innovations 8
divided into groups of six. In these groups, the participants worked individually on
business model canvas. After having filled in a couple of building blocks, the person gave
the canvas to the next participant of the group who extended the business model. This
continued until everyone had contributed to all business models of the group.
At this stage, novelty and creativity were still the focus. However, we also started to
ask the participants to assess the interrelations between the business model elements. The
business models were then assigned to individuals who checked them for consistency and
made a first assessment concerning feasibility. All business models were then discussed
in the groups and the two business models that came out as favourites were presented to
the other groups.
This exercise resulted in 21 draft versions of business models. In the phase until the
next workshop, the models were then described in further detail through desk research
and virtual collaboration.
Prioritisation
The prioritisation workshop started with a discussion on trends and expected changes in
the emerging smart-energy market to create a common outlook for the future. The trends
were derived from a compilation of different trend studies. This helped to create a
common understanding about the contingency factors that influence the business models
and also helped to create a common view on the market.
In the voting process for the business models, two dimensions were used:
‘attractiveness of and ‘effort to develop the business model. The dimension
attractivenessconsisted of four underlying factors:
Potential cost savings
Expected revenue
Influence on the company’s image
Fit with customer needs
For the evaluation of the effort dimension, three underlying factors were used:
Expected costs of implementation
Technical complexity
Organisational complexity
After introducing these criteria, all business models were visualized with their canvas and
displayed (in a market-place fashion) on the walls of the meeting room. Participants had
time to review and discuss the models with other participants. This ensured that
participants were aware of all business models, the decision criteria and they thus already
then started reviewing the models according to these criteria.
Each business model was then briefly presented. After clarifying questions regarding
the comprehension of the model, there was room for discussion. The discussion was
followed by a voting on the attractiveness of the business model and the needed effort for
implementation using the above-mentioned underlying factors. The participants voted on
a three-point scale: ‘high’, ‘medium’ or ‘low’. The votes were discussed either if
requested by one of the participants, or if votes diverged by more than one step (i.e. at
9
least one participant voted high and at least one voted “low”). This allowed
consolidation of the expert opinions in a Delphi-analysis-like fashion, where divergent
opinions are discussed. To compare the business models, the votes were plotted in a
portfolio, which is shown in figure 3. Displaying the voting visually has the additional
advantage that the group can validate the ranking by comparing the position of the
models, which makes it very intuitive and normally triggers discussions and
repositioning.
Overall, six business models were ranked as very attractive’, ten were ranked as
interesting, and five were ranked as currently not interesting. Further conclusions can
be drawn from the results of the prioritisation process when looking at the results in a
little more detail.
More than half of the business models were rated with a high effort needed for
implementation and only two were rated with low effort. This shows that many business
models in the smart-energy market require rather large changes in companies and high
efforts in terms of investment and technology needed. On the other hand, only five
business models had low expected results. Thus it can be said, that the innovation
opportunities were judged on average as very attractive. But at the same time pursuing
the opportunity might be discouraged by the expectation of high development effort.
Figure 3: Forcing decisions through a prioritisation scheme.
In a collaborative business modelling (CBM) project, the questions Which business
models should be implementedand in what sequenceare not fully addressed, as this is
a management decision, which needs to be taken by the individual organization.
However, the participants shared one conclusion, which was that it would be advisable to
develop a portfolio of high effort and low effort business models. From the high-effort
business models only the ones with the highest expected results should be pursued.
Additionally, low-effort and medium attractiveness business models, such as models 8 or
17 in figure 4, can be used as “quick wins”. They were expected to generate value
relatively fast and with a smaller effort compared to other models. They could also be
used as market entry models to gather first experiences in the new smart energy market.
Collaborative business modelling for systemic and sustainability innovations 10
Validation
The business models, which were ranked highest in the second step, were validated in the
third and last step. The basis for the validation was desk research, expert feedback and
discussions in the working group. Each building block of the proposed business model
underwent this process and was labelled as available/realistic(green), uncertain/to be
developed(yellow) or not available/potential show-stopper (red). An example of the
result of the validation is shown in figure 4.
If a business model contains red building blocks, it needs to be reviewed to see if the
red building blocks can be substituted or if it can be expected that the red ‘show-stopper’
building block might become available in the future. In general, the dominant colour of
the canvas (green or yellow) already gives a first visual indication of the feasibility of the
business model and thus facilitates strategic discussions.
Figure 4: Validation of business models.
In the second part of the third workshop, the participants developed general
recommendations and concrete action steps for each of the validated business models.
The general recommendations included a list of show-stoppers and enablers that are
relevant for most business models. Action steps on the business-model level were
developed in small groups and then also discussed in the whole group to share ideas and
capitalize on all different backgrounds of the whole working group.
After finalizing the business models, room was given to discuss next steps and how to
continue the collaborative innovation process. That led to some concrete collaboration
projects and a joint list of policy recommendations to overcome the regulatory and
legislative barriers that prevent smart-energy business models.
Building
Block T
Key Partners Key Activities Value Propositions Customer
Relationships
Customer
Segments
Cost Structure Revenue Streams
Key Resources Channels
Building
Block A Building
Block N
Building
Block O Building
Block D
Building Block S
Building
Block H
Building
Block C
Building Block K
Building
Block U
Building
Block J
Bilding
Block R
Building Block
V
Building
Block G
Building Block F
Building
Block M
Building Block
L Building
Block Q
Building Block B
Building Block E
Building
Block P
green Available/realistic yellow Uncertain/to be developed red Not available/show stopper
11
Evaluation of the approach
To evaluate the approach, we built on the feedback we received and on our own
reflections from comparisons with other approaches, which we have used earlier. These
approaches were primarily used in market exploration projects and involved using the
scenario analysis and roadmapping method (Heger & Rohrbeck, 2012).
Overcoming the general barriers to innovation
Firstly we wanted to assess if the approach helped to overcome the general barriers to
innovation. These include insufficient thinking out-of-the-box due to daily routines, the
lack of willingness to work with external partners, the resistance to challenge basic
assumptions and the lack of persistence in driving innovation (Rohrbeck, Döhler, &
Arnold, 2009). Figure 5 shows how the approach has contributed to overcome these
general barriers to innovation:
Figure 5: Three steps of the collaborative business modelling process.
1. In the first step, the approach helped to start unlocking barriers of innovation by
enhancing creativity. In addition, group dynamics were triggered, including building
trust among participants and preparing them to work jointly on innovative ideas. On
a practical level, different creativity techniques were used to create a multitude of
ideas on potential business model elements.
2. In the second step, the portfolio ranking method was used to force decisions. This
was prepared on a group level by reviewing the key trends, which in turn created a
common understanding and common terminology within the group. On a practical
level, the following criteria-based ranking allowed the group to create a shared
prioritization of the business model candidates.
3. The third step has its strength in preparing the implementation of business models.
On a group level, this step allowed the identification of development activities that
Collaborative business modelling for systemic and sustainability innovations 12
need to be addressed jointly by multiple participating companies. On a practical
level, the step allowed a thorough validation of the business model.
Overcoming the specific barriers of sustainability innovations
At the offset, we expected CBM to facilitate strategic conversation and innovation
planning for sustainability innovations that are characterized by a high degree of
uncertainty and a systemic nature. These characteristics are present in many sustainability
innovations such as e-mobility, i.e. electric-propulsion vehicles, (Johnson & Suskewicz,
2009) and in our case, the smart-energy business models.
The starting point from the participants’ point of view was that they all had done
analyses and developed concepts on the future of the smart-grid market from the
perspective of their organizations. The outcome of these analyses had mostly been (1)
that they had been overwhelmed by the complex system of the interdependencies that
resulted in (2) a lack of willingness to approve substantial investments by the top
management, and (3) that the uncertainty did not allow them to create a business case that
would suffice to ask for a top management decision.
These reported barriers matched with the barriers, which we discussed in our
literature analysis to be particularly challenging in complex sustainability innovations.
When comparing the situation of the participating firms before and after the CBM, we
can identify four strengths of the approach:
Dealing with uncertainty, through three mechanisms: First through a real reduction
of uncertainty by sharing information across organizations. All participants came
with some knowledge about factors that may influence the future development. By
sharing these insights, a more holistic and reliable picture was created. Second, the
participants realized that all interested parties were affected by the uncertainty and
when obtaining more information through their sharing of their individual insights,
they now felt to have a competitive advantage against organizations outside the
group. Third, they enhanced their understanding about factors that prevent the
emergence of the smart-energy market and could for example formulate policy
recommendations to promote the market development without the need to predict the
market development trajectory in detail.
Finding creative solutions: Most participants had done extensive analyses in their
organizations and overall had the feeling that they had well understood what can and
cannot be done to promote the market. However, by bringing together participants
with diverse backgrounds and by using creativity techniques, ideas and solutions
emerged that had not been identified before. This confirms the expectation that
designing winning business models is an inventive process (Sosna et al., 2010; Zott
& Amit, 2010) that, if successful, creates virtuous cycles that reinforce the
competitive value of the business model (Casadesus-Masanell & Ricart, 2010). The
different backgrounds of the participants reduced the barrier of ‘limiting the ideas by
the current assets of the firm’ (Chesbrough, 2010), and allowed to find creative
solutions to strategic paradoxes (Smith, Binns, & Tushman, 2010) and also to break
away from the organizational memory that might stand in the way of creation
(Govindarajan & Trimble, 2011).
13
Facilitating a strategic discussion about business models through which benefits are
not only identified from the perspective of the focal firm, but also from a societal
perspective (Doz & Kosonen, 2010; Laszlo, Laszlo, & Dunsk, 2010), including their
impact on sustainability goals (Thompson & MacMillan, 2010). It has been argued
before that value cannot only be created by individual firms, but also through
multiple firms that engage in a collaborative entrepreneurship (Miles et al., 2006).
The level of detail of the business model canvas seemed to work particularly well to
discuss and create shared visions thus creating promising expectations about the
emerging market (McDowall & Eames, 2006). This can be seen as a first step in
unlocking the barrier of unwillingness to allocate sufficient resources to develop the
market.
The building block level also allowed to start the innovation planning. Participants
were particularly pleased by the possibility to tie detailed feasibility analyses to the
individual elements of the business models. After classifying the elements in green
(available/realistic), yellow (uncertain/to be developed) and red (not
available/potential show stopper), the groups identified actions that needed to be
taken in order to transform red or yellow building blocks into green ones. Some of
these actions were in the scope of what the participants could do themselves and
others were transformed into recommendations to policymakers or joint actions.
Overall it can be said, that CBM can contribute to understanding the systemic nature of
sustainable innovations. It can create a more holistic picture of how a new value
creation/value capture system can emerge and allow the identification of actions designed
to promote and develop a more sustainable future.
Limitations and obstacles of the CBM approach
Our project was focussed on creating visions about how the market might develop and to
create value-creation architectures. In future research it would be interesting to choose a
case where joint value-capture is also part of the project in order to be able to assess also
the strength of CBM for the implementation of new business models. We were therefore
not able to establish if CBM can support the voluntarily and emergent processes that are
associated with the evolution of business models (Demil & Lecocq, 2010).
One obstacle of the approach could be the required time. Particularly the need for
three full-day workshops will prevent firms to engage in such activities frequently.
However, the relatively high time consumption will also work in a positive way as it will
ensure the participation of only organizations that have a sufficiently high expectation
about the outcome of the approach and a sufficiently positive view on the potential value
from the systemic innovation. Continuous participation is also promoted by the provision
of intermediate results after each workshop, which allows participants to bring valuable
insights to their organizations throughout the whole process.
Comparison with alternative methods and approaches
The different frameworks for collaborative exploration of new markets have particular
strengths and weaknesses. Overall, it can be said that the scenario technique is very
suitable for creating an image of future developments and facilitating strategic
discussions (Ringland, 2010). Roadmapping has its strengths in planning, enforcing
Collaborative business modelling for systemic and sustainability innovations 14
decisions and identifying interdependencies between market and technology (Phaal et al.,
2004b; Phaal et al., 2004c; Thom et al., 2010). The CBM approach facilitates planning,
implementation and decision-making when dealing with sustainability innovations and a
high level of both complexity and uncertainty.
Due to the different characteristics, the optimal usage of the frameworks depends on
the given task. It is important to select the most suitable framework according to the
given situation and the expected results. We believe that if the whole innovation process
should be covered, all three frameworks can be appropriately used at different stages of
the innovation process.
In the case of sustainability innovation, the following combination of the different
frameworks to a “collaborative business field exploration process” can be suggested.
Through the scenario technique, different images of the future can be developed.
Participants get a concrete idea of how the market might develop. It is a very broad
approach and includes environmental conditions, which are not directly connected to
the examined market. It creates an understanding of the future rather than being a
planning tool. This broadens the horizon of the participants while making the future
development more concrete. The scenario technique profits greatly from
collaborative work and different backgrounds and experiences of the participants. In
a first step of collaborative business field exploration, it can be used to set the frame
for a brainstorming process by triggering ideas for relevant business models of the
future.
Roadmapping creates a more detailed frame of the future. It shows a way to one or
more desired or expected future scenarios. It answers questions such as when certain
technologies are expected to be available, which rules and laws apply at which point
and how these milestones are based on each other. It gives an indication about
needed competencies and necessary steps, but does not yet go into the details of
individual products or business models. Rather it breaks down a scenario that is
expected in year X to milestones along a timeline leading to this scenario. This can
be useful to be aware of the development of a market and later refer back to this
timeline to place business models along it.
Using CBM as a third step strengthens the business perspective and facilitates the
transition from planning to implementation (Richardson, 2008). Building on the
expectations from scenario analysis and roadmaps, CBM is used to create and
validate value creation and value capture systems. CBM therefore also answers the
crucial question of how the individual organization will profit from creating the
market. Through the business model, the answers can be given on a conceptual level,
which will sidestep the question of the monetary benefit. But the conceptual answer
might be sufficient for organizations to take substantial investment decisions.
Conclusion
We have argued that a CBM approach can be used to create sustainability innovations,
especially if a new market or a value creation/value capture system needs to be created.
We have concluded from the case that in a context with a high level of uncertainty, CBM
carries the benefit of staying on an architectural level. In that way the compelling
15
business logic can be presented without the traditional business case. The approach has
been described, discussed and evaluated on the basis of the participantsfeedback,
through comparison to alternative methods (scenario analyses and roadmapping) and
through comparing expected and actual benefits from the method.
In the case study we have shown that the CBM approach can support the joint
development of business models, particularly for sustainability innovations, where
pooling of complementary skills, technologies and assets as well as an orchestrated
implementation are needed. Results from the case study show that CBM between actors
along the value chain can contribute to create a common understanding of drivers and
barriers as well as creating a common view on how the market might function in the
future (Baden-Fuller & Morgan, 2010). This also opens the opportunity to co-create
business models and value networks (Koen, Bertels, & Elsum, 2011) that are operated
jointly by industrial firms and non-governmental organizations (NGOs) operating on non-
profit business logics (Dahan, Doh, Oetzel, & Yaziji, 2010). From an innovation system
point of view, CBM can support an economy to adapt to sustainability objectives by
facilitating the collaboration of multiple organizations (Ulhøi, 2008).
Our study revealed that by building trust and identifying mutually benefiting business
models and by enabling participation of the different organizations, fertile ground for a
future implementation has been created. The building of trust matters also because
divergent goals and interests can be expected to hamper the willingness to develop
systemic innovations and thus might prevent the successful development of sustainability
innovations (Ruohomaa & Kutvonen, 2010).
The successful implementation of the CBM approach will also require that the
participants commit to share valuable insights, complementary skills and assets and
commit to an open-innovation paradigm. Our study could not reveal to what extent
sharing of skills and assets would have occurred, but the amount of shared insights (such
as internal reports, open discussions about expected future development) is particularly
remarkable as some organizations are direct competitors. This might be explained
because business modelling strongly facilitates strategic discussion and thus contributes
to the forming of teams consisting of the participants from competing firms (Hoegl &
Gemuenden, 2001). Also the usage of brain-writing, where everyone contributes in
private (i.e. through writing on the canvas) might decrease the perception that corporate
secrets are communicated.
In this article we have (1) given a detailed description on how to conduct CBM, (2)
discussed the strengths and limitations, (3) confirmed the applicability of CBM for joint
market development, and (4) framed CBM as an important innovation management tool
for systemic innovations.
By discussing the case of smart energy systems, we also contribute to the discussion
on how innovation management has to be enhanced to work in highly uncertain
environments, in innovation fields that are characterized by a high-level of
interdependencies, and to allow integrating societal value creation as a desired outcome
(Seelos & Mair, 2007).
We hope that we have motivated a broader discussion on which innovation
management tools are needed to identify, plan and develop sustainability innovations. We
believe that governmental and industrial actors need common platforms to discuss, plan
and execute joint initiatives and thus overcome the barriers that prevent the development
of effective policies and sustainability innovations.
Collaborative business modelling for systemic and sustainability innovations 16
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Biographical information
René Rohrbeck is Associate Professor of Strategy at the Aarhus University. His research
interests are organizational change, strategy as practice, innovation management and
corporate foresight.
He has 6 years of practical experience in the ICT and automotive industry, where he
worked for Deutsche Telekom and Volkswagen on strategic management, innovation
management and corporate foresight. In addition he has served as consultant for various
companies in the ICT, automobile, luxury goods and energy industry.
René Rohrbeck's teaches strategic management, innovation management, corporate
foresight and technology management on MBA, Master and Bachelor level.
Lars Konnertz works as a logistics coordinator for Greenpeace Germany. He studied
mechanical engineering and management at the TU Berlin where he specialized in
renewable energy. During his studies he worked at the energy business group of the EICT
where he participated in the development of the collaborative business modeling
approach. Later he worked in the wind energy industry where he developed a procedure
for multi-plane balancing of wind turbine drive trains.
Sebastian Knab is a research assistant at Universität Hamburg, Chair of Business Ethics
and Management. His research interests include innovation management and ethics,
strategic management, sustainability and energy management.
Before joining Universität Hamburg he was a project manager for innovation
management at the EICT for 3 years and a research assistant at Technische Universität
Berlin, Chair of Sustainable Electric Networks and Sources of Energy. At the EICT he
established the energy business group where he successfully conducted consultancy and
research projects on innovation planning, corporate foresight, business modeling and
roadmapping mainly in the energy and telecommunications industry.
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